Treasurer Jim Chalmers has announced several new federal initiatives to overhaul the way money transactions are processed in Australia.

The Strategic Plan for the Payments System will eliminate cheques as part of a plan to modernise the payments infrastructure, which will also involve upgrading the Bulk Electronic Clearing System (BECS) currently used by the AusPayNetwork.

Other priorities include increasing protections against scams and cyber attacks, updating regulations, uplifting competition and innovation throughout the industry and establishing Australia as a leader in the global payment landscape.

See Also: Debit and Credit Card Statistics

The Australian Banking Association (ABA) has welcomed the proposal, with CEO Anna Bligh saying it was long overdue. 

"A productive world class economy needs a modern and efficient payments system. Today’s announcement is a long overdue overhaul of the payment arteries that drive the Australian economy," Ms Bligh said. 

She said many aspects of the current payment system are out of date, pointing out that many everyday transactions are still processed using a 60 year old system.

"The Treasurer has today set out the strategic direction to move our economy away from this system and transition fully to the real time payments platform, built by Australian banks in 2017," Ms Bligh said.

She also highlighted the current payment legislation, which hasn't substantively changed since 1988.

Pour one out for cheques?

An ABA report found just 0.2% of payments are now made using cheques.

New Zealand, the Netherlands and South Africa are among several countries that have already moved to phase out or remove them from the payment system.

Even cash transactions are rapidly declining, with ABA reporting 75% of payments now use cards, compared to 26% in 2007.

RBA data released Wednesday revealed around half a million personal cheques were drawn in April, down from more than 2.1 million just six years ago.

The Treasurer said it no longer made sense for cheques to be part of an increasingly digital network.

"Leaving cheques in the system is an increasingly costly way of servicing a declining fraction of payments," Mr Chalmers said.

He called digital transactions "cheaper, easier and more accessible."

He also looked to placate those concerned less tech savvy Australians could be left behind.

"This transition will be gradual, co-ordinated and inclusive,” he said.

The plan is for 'legislative and other barriers that entrench the use of cheques' to be removed by 2028, as well as government cheque use eliminated by then, while the cheque system is intended to be wound down no later than 2030.

The robots are coming

ABA's research showed that just 13% of payments are in cash today, down from 70% in 2007. 

The value of mobile wallet transactions reached $93 billion in 2022, up from $746 million in 2018, while the number increased to 2.4 billion from 29.2 million.

This comes as the RBA plans to implement least-cost routing (LCR) for mobile payments in 2024, which will lessen the burden on merchants whose merchant fees are higher on mobile transactions than other payments like EFTPOS.

Dr Chalmers also made it clear these changes aren't just about updating outdated payment methods, but ensuring the Australian payments system can accommodate future break throughs in technology like AI that could further improve efficiency and security.

"Our plan for payments is about a lot more than triaging the problems we face now or playing catch-up and patch-up," he said.

"Digitisation and new developments in technology, like AI, have the potential to unleash a new wave of productivity improvements."


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